The private label business has been challenging for ConAgra Foods since it acquired Ralcorp Holdings in January 2013. The $6.8 billion deal has yielded disappointing results for the packaged food giant who said it will now divest the private brand business as it seeks to turnaround profits.
“As I have intensely studied the situation in our Private Brands operations over the last few months, it has become clear that the time and energy the company is devoting to the Private Brands turnaround represent a suboptimal use of our resources,” said Sean Connolly, CEO. “To prevent further distraction, we are pursuing the divestiture of our Private Brands operations. Because the outcome of our strategic review for the Private Brands operations will influence our long-term financial outlook, we will wait until this process is complete before sharing long-term financial commitments. We expect to offer operating details of our plans as well as long-term financial expectations at an investor event later this year.”
The announcement was made when ConAgra published its financial results for fiscal year 2015, ended May 31 on Tuesday (June 30).
For the year, the company recorded a loss of $252.6 million, which compared with net income of $303.1 million, equal to 72 cents per share on the common stock,
in fiscal 2014. The Private Brands divestment is part of a new strategic direction that will focus on growing ConAgra’s Consumer Foods and Commercial Foods business units, Connolly said. “We expect to continually refine our portfolio with prudent divestitures and acquisitions, and there will be a strong emphasis on deploying capital in ways that benefit shareholders.
” Sales for the year remained flat at $15.8 billion, which compared with sales of $15.84 billion for fiscal 2014.